Online gaming will benefit from robust regulation- The New Indian Express
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The ubiquity of technology has led to numerous new avenues of business—e-commerce, entertainment, education, communication, etc. This has called for the management of the respective sectors and the need for their regulation has been felt. One less noticed sector is the area of online gaming, which received a massive boost during the pandemic. As per a report published by consulting firm KPMG, more than 43 crore Indians have spent time on gaming. To appreciate this better, it is important to understand what online gaming is.
There are essentially three types of online gaming—fantasy sports, esports and online casual games. Fantasy games allow users to create a team consisting of players from real sports teams (for example, the IPL or NBA) and then win points according to how they perform in the real tournament. E-sports are video games of yesteryears now played online in an organised fashion. They have tournaments for professional players, individually or as teams. Online casual games are either a game of chance where the end result is strongly determined by random activity such as rolling the dice (and if money is involved, it is considered gambling), or a game of skill that requires physical and mental strategies to win.
This new-age industry suffers from a complex regulatory muddle. Given the pan-India operations and reach, a central regulation could take things forward. But there is no clarity on who should regulate it—while the IT ministry is responsible for the information technology system, the Act governing the sports ministry did not envision electronic gaming. And the IT ministry limits itself to the content, leaving the online gaming industry with no clear nodal ministry.
Here is the fundamental issue confronting the online gaming industry—whether it is a game of skill or a game of chance. From this issue arises the legitimacy of online gaming. While games of skill are allowed in most parts of the country, games of chance are considered gambling and hence deemed unethical and illicit. As betting and gambling is a state subject as per the Constitution, some states have placed restrictions on games of skill as well.
There have been numerous cases filed by groups and organisations to classify their offering as a game of skill and get legal status. There have been many public interest litigations questioning the legality of online games, especially fantasy platforms. In August 2021, a Madras High Court verdict (Junglee Games India Pvt. Ltd. v. State of Tamil Nadu) struck down a TN government law that put a blanket ban on all forms of online gaming, including games of skill.
But there is another issue that surrounds online gaming—IP rights including image rights violation, and using players’ names and team logos on their platforms. Globally too there is no clarity over the regulatory authorities. However, countries like Russia, China, Turkey and the Philippines recognise esports as a real sport. Even the International Olympic Committee has tested the potential for esports through exhibition games.
This industry’s regulatory muddle needs a comprehensive makeover. It was hoped that announcements in the Union Budget would accelerate the movement down this path but it was not to be. And there are benefits from good management and efficient regulation—according to the KPMG report cited above, the online gaming industry is expected to have 66 crore users by FY 2025, leading to thousands of new jobs and a revenue generation of Rs 29,000 crore. The sector will also attract a higher Foreign Direct Investment (FDI) and the experience of the gaming industry points to that. Online gaming businesses will benefit from proper regulations as they will augment investment and revenue. The sector will also be able to attract talent and potential professional players will also profit from it.
Regulations will also curb illegal activities that have created a black market, supplemented by the use of virtual currencies. Since there are no rules, players also indulge in match-fixing and there is also the problem of underage gambling. Importantly, the mental health of players will be addressed and exploitation can be prevented.
In addition to the dramatically increased screen time, there is the risk of adverse impact on our people, especially the youth. There are increasing indications of young people becoming compulsive gamers. Addiction of any kind can be destructive for the individual and society. A regulator can be expected to address such societal issues too.
The current wide disparity in rules and regulations poses a huge compliance burden for the companies. The ambiguity results in users having varied rights and remedies against the platforms. Without clear guidelines as to what constitutes a game of skill or a game of chance, innovation in the field is stifled.
The disparity in regulations poses a compliance burden for the gaming companies. This ambiguity can lead to users having varied rights. Indian gaming severely requires a robust regulatory revamp. It will be appropriate for the Central government to step in to create an omnibus regulatory framework for the industry.
Manavendra Prasad
The writer is a policy analyst
